Castleton Technology PLC – Half-year Report

Castleton Technology plc (AIM: CTP), the software and managed services provider to the public and not-for-profit sectors, today announces its unaudited interim results for the six months ended 30 September 2019.

Financial Highlights

·     Recurring revenues of £7.6 million comprise 66% of total revenue (H1 FY18: recurring revenues of £7.0 million comprise 55% of total revenue)

·     Revenues decreased 10% to £11.6 million (H1 FY19: £12.9 million). Organic⁽ⁱ⁾ revenues decreased by 13%, driven by lower one-off revenues

·     Adjusted EBITDA⁽ⁱⁱ⁾ decreased 3% to £2.9 million (H1 FY19: £3.0 million). The adjusted EBITDA^(v) of £2.9 million has benefited by £0.2 million due to IFRS 16 with costs now taken in depreciation and finance costs. Organic⁽ⁱ⁾ Adjusted EBITDA decreased by 11%

·     Cash generated from operations of £2.3 million (H1 FY19: £3.0 million) which is 80% cash conversion⁽ⁱⁱⁱ⁾ (H1 FY19 102%)

·     Loss before tax for the period of £0.2 million (H1 FY19: Profit before tax for the period £0.5 million)

·     Adjusted net debt^(iv) as at 30 September 2019 of £4.1 million excluding IFRS 16 lease liabilities (30 September 2018: £5.3 million). As at 31 March 2019, net debt was £5.1 million

·     Maiden dividend paid on 18 September 2019 of 1p per share

 

Operational Highlights

·     Significant new Managed Services contract wins with Grand Union, Suffolk Housing and Colne Housing

·     Completion of the first version of the Castleton.AI platform, and first standalone sale of this product

·     Merging of the Software Solutions and Managed Services businesses on 1 June 2019, to create a truly “one Castleton” structure with the intention of delivering a unified, seamless and enhanced customer experience

·     Growth in contracted backlog of 5% since H1 FY19

·     Social housing customer base now 595, compared to 591 as at 31 March 2019

·     Percentage of customers taking more than one product has increased to 52%, from 50% at 31 March 2019

 

Post Period Highlights

·     Chosen by the National Housing Federation as the preferred supplier for Housing Management Solutions

 

Outlook

·     The Company is confident that revenue, EBITDA and cash generation will show a material improvement in the second half of the year

 

David Payne, Chairman of Castleton, commented:

“As reported at the Group’s trading update on 10 October 2019, the first six months of FY20 has been challenging, particularly compared to the strong comparable period last year. This was primarily due to a decline in one-off revenues and the reorganisation of the business taking longer to embed than first anticipated.

We have focussed our efforts on recurring revenue and building a strong future revenue base, and whilst this reorganisation has created short-term disruption, it will result in the streamlining of our sales and delivery functions. I am confident that this will stand the business in a strong position for the future, and I remain optimistic of the Group’s success and continued growth.”